Daily Market Outlook by AceTrader-10-8-2010

Market Review – 09/08/2010 22:47 GMTDollar rises against most currencies ahead of FOMC meetingDollar rose against most of its counterparts on Monday as investors unwound their existing positions and waited for signals on the statements on economic and monetary policy from Tuesday’s FOMC meeting.

Although the greenback initially fell to an intra-day low of 85.30 versus the Japanese yen in NZ, dollar edged higher in Asia and climbed to 85.75 in European morning. Later, the greenback rose again in NY morning and extended its gain to an intra-day high of 85.96 on the firmness in global stock markets. Major European equities rose by more than 1.4% whilst DJI advanced by 45 points or 0.42% to 10699 on speculation that the Fed would consider more stimulus measures at its meeting on Tuesday.

In addition, Japan Finance Minister Noda told reporters that ‘excessive and disorderly forex moves are undesirable and would hurt economy and we will give our utmost attention to forex moves.’

Earlier in Asian morning, PBOC fixed the CNY’s mid-point rate at a record high of 6.7665 since its revaluation in 2005. There were reports that China’s industrial ministry had ordered over 2,000 companies to close production as part of recent efforts by the government to restructure the economy and meet environmental standards.

Although the single currency traded narrowly in Asia due to Singapore’s market holiday after Friday’s rally to a 3-month high of 1.3334, the pair briefly rose to 1.3308 in European morning. However, euro retreated from there on renewed risk aversion (eur/jpy pared early gains and fell from 113.95 to 113.33) as Greece reported cash deficit of 14.47 billion euros during the January-July period versus 21.47 billion euros in the same period in 2009, and then the single currency fell sharply to an intra-day low of 1.3216 in NY mid-day before stabilising.

Earlier, ECB Governing Council Member Athanasios Orphanides said there is no need for the central bank to rush in unwinding its emergency stimulus measures and saw no sign in forecasts of long-term inflation expectation rising.

Although the British pound edged higher in Asia after minor retreat following Friday’s rally to a 6-month high of 1.5999 and cable rose briefly to 1.5998 at European opening on Monday, cable’s failure to penetrate said Friday’s high prompted long liquidation and sterling dropped to 1.5931, then declined to an intra-day low of 1.5890 in late NY trading session on cross-selling in sterling especially versus euro.

In other news, British Bankers’ Association said bosses of six major British banks are to form a taskforce designed to get lending to businesses moving again.